Jobs on line as Sainsbury trims the fat: Consultants called in as discount competition bites

J SAINSBURY, one of Britain's biggest and most paternalistic employers, with 120,000 staff, has appointed consultants to review its operations in a move expected to lead to substantial job losses at its head office and possibly in its stores.

Two sets of management consultants are advising the company. P A Consulting is examining staff levels at the head office in London. Senn Delaney, an arm of Anderson Consulting, is working on reforms in the stores.

Sainsbury is coming under pressure to cut its pounds 1.1bn wages bill as competition from discounters squeezes its margins for the first time in more than a decade. 'No one has as much fat to cut as Sainsbury,' said one analyst.

The retail group, which is controlled by the Sainsbury family, is also under pressure to reduce its ambitious store opening programme. Last week Tesco announced plans to slow expansion, following a lead set by Argyll Group, owner of Safeway, last month.

Under its former chairman and chief executive John Sainsbury, whose watchword was 'Retail is detail', Sainsbury inevitably built up duplicated functions as staff were taught to double-check and triple-check.

David Sainsbury, his cousin and successor, believes that some functions can be dismantled without hitting quality or the needs of customers. P A has been asked to examine all head office departments - from buying to information technology and advertising.

New technology, for example automatic re-ordering, could make several layers of management redundant. At store level the consultants are thought to be considering whether an entire supervisory level is necessary. There may also be scope to switch to more part-timers.

Sainsbury's staff roster has mushroomed over the last 15 years. About half its employees have shared in profits through bonuses and shares.

A spokesman for Sainsbury confirmed that P A was conducting a 'business process re-engineering review' of the head office, where 2,000 staff are employed. The review, begun two months ago, was looking at whether all the head office functions were necessary. 'It is too early to say whether there will be job losses,' he said.

If job losses were necessary, the group would attempt to achieve them through natural wastage. However, he denied that the Senn Delaney project in stores, which is known as the Star Programme, would lead to job losses. It was aimed at improving customer service.

Senn Delaney, whose other clients have included Kingfisher and Burton, began advising Sainsbury in August 1992, and has changed working practices in about 30 stores. It is now training Sainsbury executives to 'roll out' the programme across the other 300 shops.

Greg Rubin, the Anderson partner responsible, said the aim was to increase customer service levels by streamlining other shop functions. Staff attrition had not been a goal, though 'certainly possible'.

Sainsbury is due to make a Christmas trading statement on Friday, its presentation brought forward from the following week. It will face questions not only on its pounds 800m-a-year expansion plans, but also on whether it should value its property more cautiously. Tesco announced plans last week to depreciate its stores.

Sainsbury has already had to reposition itself to counter the threat from discounters. In the autumn it launched the 'Essential for the essentials' campaign, emphasising value for money on everyday items.

Last week it opened its first warehouse store, Bulksava, in Beckton, east London. The 33,000 sq ft shop stocks 1,000 keenly priced lines - a fraction of the 15,000 sold in a typical Sainsbury superstore.

Sainsbury also continues to invest in its own-label and own-brand lines. Novon, its own-brand detergent, has been a great success. Own-brand pet food and a cola drink are expected to follow.

Annual profits would be hit by around pounds 30m if Sainsbury were to follow Tesco on its depreciation policy.

Sainsbury is not expected to match the 4 per cent underlying sales increase recorded over Christmas by Tesco. It has harder comparatives to beat because of a very strong Christmas 1992, when demand was boosted by its free flights promotion. However, gross margin damage may be less than the 0.7 per cent decline thought to have been suffered by Tesco.

Sainsbury is Britain's fourth largest employer, with 43,000 full-timers and 77,000 part-timers, although a few of these work in the United States.

Supermarket reality, page 3

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